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Amazon offers refunds for unauthorised game buys by kids

01 June 2017

Amazon is offering customers refunds for charges their children have incurred playing games from the company's Appstore not authorised by their guardians, settling a case with US federal regulators.

Amazon was accused of unlawfully billing parents for more than $70 million in purchases by game-playing children.

The deadline for submitting refund requests is 28 May 2018, the Federal Trade Commission said on Tuesday.

The move comes nearly three years after the FTC sued Amazon in federal court over in-game charges that shocked unsuspecting parents.

"Amazon's in-app system allowed children to incur unlimited charges on their parents' accounts without permission," the FTC's then-chairwoman Edith Ramirez said when the lawsuit was filed.

A judge concurred and the FTC says the company has agreed to refund up to $70 million in unintended charges.

Amazon spokesman Jonathan Richardson said in a statement on Wednesday, "We have contacted all eligible customers who have not already received a refund for unauthorised charges to help ensure their refunds are confirmed quickly."

Eligible for the refund are those who believe their child made an in-app purchase without their permission between November 2011 and May 2016. To avail of the refund, affected people can log into their Amazon account and look in the Message Center under 'Important Messages', or simply call Amazon.

According to the FTC complaint, games often blur the lines between what kids can buy with virtual currency and what they're buying with actual money.

Amazon has offered many children's apps for download to mobile devices such as the Kindle Fire, the FTC said. For example, in the game 'Ice Age Village' children could spend unlimited amounts of money to pay for virtual items such as 'coins', 'stars' and 'acorns' without sufficient parental consent, federal officials said in the 2014 complaint.

The can also pay real money to buy more of the virtual currencies, which on a screen look very similar.

But, on Wednesday, Amazon's Richardson said, "Since the launch of the Appstore in 2011, Amazon has helped parents prevent purchases made without their permission by offering access to parental controls, clear notice of in-app purchasing, real-time notification for every in-app purchase and refund assistance for unauthorized purchases."

The FTC asked the court to require that Amazon refund unauthorised charges and to prevent it from billing account holders for future in-app charges without their consent.

A year ago, federal district court Judge John Coughenour agreed to the refunds. He wrote, "The Court determines that the scope of Amazon's unfair billing practices pertains to all in-app charges made by account users without express, informed authorisation." But he denied the FTC's request for the future billing ban.

Richardson noted, "The court here affirmed our commitment to customers when it ruled no changes to current Appstore practices were required. To continue ensuring a great customer experience, we are happy to provide our customers what we have always provided: refunds for purchases they did not approve."

Appeals dropped
The FTC and Amazon agreed last month to end their litigation.

The FTC has appealed the judge's decision in hopes of securing a future ban, and Amazon appealed the refund order. Last month, both sides agreed to drop their appeals so the refund process could begin.

According to the FTC, when Amazon introduced in-app charges in its Appstore in November 2011, it didn't require any password to spend real money inside an app. In March 2012, the FTC said the company updated its system to require the account owner to enter a password for single purchases over $20. That meant children could still make an unlimited number of purchases under $20 each.

Then, in early 2013, Amazon began requiring a password for some charges, the FTC said. But, even when a parent authorised a single charge, that permission sometimes lasted for up to an hour, allowing children to make more purchases without new authorisation.

"Not until June 2014, roughly two and a half years after the problem first surfaced," did Amazon begin to require account holders' consent for in-app charges on its newer mobile devices," the FTC said in a statement.

The judge's ruling noted that, "By December 2011, (Amazon Appstore Director) Aaron Rubenson referred to the amount of customer complaints as 'near house on fire'... Rubenson also referred to 'accidental purchasing by kids' as one of two issues the company needed to solve."

Amazon was the holdout in the FTC's crackdown on unwitting in-app purchases. It made similar claims against Google and Apple and those companies both settled. Google agreed to refund $19 million and Apple agreed to refund $32 million to eligible customers.

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